Category: 4. Setting Stop Losses

Well, there you have it… our awesome primer to setting stop losses. Now let’s review the things you need to remember about stop losses. Find a broker that allows you to trade position sizes that suits the size of your capital and risk management rules. We use the word “predetermined” a lot in this lesson because…

Once you’ve done your homework and created an awesome trade plan that includes a stop-out level, you now have to make sure that you execute those stops if the market goes against you. There are two ways to do that. One is by using an automatic stop and another through a mental stop. Which one is best suited…

Let’s talk about the four biggest mistakes traders make when using stop losses. We always stress using proper risk management but when used incorrectly, it could lead to more losses than wins. And you don’t want that, do ya? 1. Placing stops too dang tight. The first common mistake is placing stops tighter than those leather pants that…

Time stops are stops you set based on a predetermined time in a trade. It could be a set time (open limit time of hours, days, weeks, etc.), only trade during specific trading sessions, the market’s open or active hours, etc. For instance, let’s say you are an intraday trader and you’ve just put on a long trade…

To put it in simple terms, volatility is the amount a market can potentially move over a given time. Knowing how much a currency pair tends to move can help you set the correct stop loss levels and avoid being prematurely taken out of a trade on random fluctuations of price. For instance, if you are in…

The previous lesson discussed how to set stop loss using a percentage-based amount of your account. A more sensible way to determine stops would be to base it on what the charts are saying. Since we’re trading the markets, we might as well base our stops on what the markets are showing us… Makes sense, right?…

Let’s start off with the most basic type of stop: the percentage-based stop loss. The percentage-based stop uses a predetermined portion of the trader’s account.  For example,  “2% of the account” is what a trader is willing to risk on a trade. The percentage risk can vary from trader to trader. More aggressive ones risk up to 10%…

Managing and preserving your trading capital is your most important job as a trader. If you lose all of your trading capital, there is no way you can make back the lost amount, you’re out of the trading game. If you make pips, you got to be able to keep those pips and not give them back to…